h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

I don't know how valid this "theiving magpie" accusation is - I mean, arguably it was the Green Party which came up with the first environmental policies, but you don't hear them squealing "Stop Thief!" anytime one of the mainstream parties adopts a green-tinged manifesto.

Also, the argument about giving your kids a leg-up. Ok so IHT's only paid by about 6% of the population currently, so it's hard to draw any valid statistical conclusions. But I'd have thought that most was paid when the "kids" were fairly well on in life. Surely if you wanted to give them a leg up you'd have an insurance policy maturing when they were 18, f'rinstance. (And my sympathies to anyone who has lost their parents early in life)

Well, for me it is not so much the "Leg Up" aspect, it has more to do with you personally deciding where your money goes when you die rather than let the government have any more of it.

Assuming you have worked legally and honestly all your working life, then you have been taxed all over the place on your income. What is left - while you are alive - is yours to do whatever you want with.

I really do not see why what you have earned, invested or whatever should then be further taxed on your departure.

"I really do not see why what you have earned, invested or whatever should then be further taxed on your departure."

Because you're dead, and therefore it's not yours any more. And at the risk of circularity, for all of the reasons I gave in post 13.

I have to say - I never thought I would hear an argument that would change my mind on the "inherent unfairness" of Inheritance tax.

Your arguements here and on at least one other thread, have made me think about it though.

Hello Otto

"Because you're dead, and therefore it's not yours any more"

Maybe so, but IF I make a decision on where that money goes (Dogs Home, Kids, Cancer Research, local pub for everyone to have a drink on me, etc)then the act of dying should not make that null and void.

If you die suddenly and no explicit instruction has been left, then I have no problem with "Its not yours anymore"

It may not physically be "Mine" anymore, but my intentions and desires for where my former belongings go should be honoured without the state taking another whack at it..........

I was astonished to hear Michael Plotillos defence of the idea of inheritance tax last night on "This Week".

It was tres bien BTW....

Hi Captain,

I'm going to try not to post the same things as I said in August, earlier in the thread, although I still stand by them. I was away and so didn't respond to all the points made myself, but Pedro made all the points I would have made (and very well too) so I didn't see a need to post again.

So I'll try to put things another way, though I suspect we won't agree because I want a society that is as fair and equitable as possible, and you don't. That's not a dig, that's my interpretation of your comments so far.

Putting it like you do in post 65 makes inherited wealth seem entirely reasonable, and from the perspective of individuals (the deceased and his/her children), and told in isolation, it is. To use an example from another thread, why shouldn't someone give their Buffy DVDs to whoever they like?

It's logically possible for an action to be okay if done by a limited number of people to a limited extent, but for it not to be okay if done by a lot of people to a much greater extent.

For example, there's nothing wrong with me deciding that I want to go on a daytrip to Stonehenge. There's nothing wrong with my decision or my action, and no harm with result in my action. But if ten million people decide they want to go to Stonehenge, it will result in huge damage to an important monument. None of those ten million individuals have done anything wrong, but the overall result is a disaster. And for this reason, access was limited at one point and may still be.

And it's the same with inherited wealth. It's hard to object to the case study of one hard working person wanting to help their children in the same way that it would have hard to object to one person wanting to see the henge. But the effects of large numbers of young people receiving large amounts of inherited wealth which gives them a huge advantage over the less-fortunate majority is a devastating blow to prospects for a fair society and equal opportunities.

What puzzles me is why so many people who profess to believe in hard work, enterprise, self-reliance, personal responsibility and so on (views which you'd associate with the right wing, typically, though not exclusively) tend to support inherited wealth which mitigates against proper rewards all those things in the next generation.

Afternoon Otto

<< What puzzles me is why so many people who profess to believe in hard work, enterprise, self-reliance, personal responsibility and so on (views which you'd associate with the right wing, typically, though not exclusively) tend to support inherited wealth which mitigates against proper rewards all those things in the next generation >>

Or which in some cases means that their inheritors don't need to conform to those views....or even work at all.

Novo

I may be totally wrong, but it strikes me that this talk of inherited riches is somewhat exaggerated.

Let's assume the second of a couple dies, owning their own home & with a certain amount of capital in the bank. Where there is an only child, they will scoop the lot (assuming no other legacies), but I suspect that in most cases there will be more than one beneficiary, instantly halving the pot. With current expected lifespans, this could well effectively skip a generation to be divided even more - between grandchildren. Hardly likely to revolutionise their lifestyle to the extent that seems to be implied.

No, I still don't buy the argument that there is so much inherited wealth that such a large proportion of one's assets should be lost in tax. It's not as if all that money is directly given to those with least.

Does anyone really believe that the government is going to distribute that money fairly ?

Of course not it goes into the pot to be squandered where the media points the finger next.

Now this government have decided that my children should pay for their further education, and also decided that our pension is so unreasonable that they should be taxing it before we even get it. (Not theirs, incidently just ours)

Two atrocious attacks upon the wealth of the vast majority of citizens, which means that inheritance tax will certainly not bother my kids, but everyone bleats on about inheritance tax !

Perhaps they think it will be a grey vote winner, popular with those who are less concerned with earning wealth & more concerned with hanging onto it.

"It's not as if all that money is directly given to those with least."

Well, yes and no. The money goes to the state, which funds vital services which benefit everyone. Assuming that the level and range of service is to be maintained, the money has to come from somewhere. And it certainly benefits the least well off for more of the bill for the state's activities to be met from inheritance taxes, which are paid only by the wealthy, rather than (say) VAT which is paid by everyone, regardless of how little they earn.

"I still don't buy the argument that there is so much inherited wealth that such a large proportion of one's assets should be lost in tax."

That's a little circular. If you're dead, it's not yours, because you're dead. And there must be an awful lot of inherited wealth - otherwise where would the money go to? I suppose purchases of 'consumables' account for some of it, but that's matched by the creation of new items for sale. Where does the money go, ultimately, if it is not inherited?

It's worth having a read of the Guardian article I posed earlier
http://politics.guardian.co.uk/economics/story/0,,2151057,00.html
IHT is generally a tax on property windfall, not on earned money. And "take the tax away and the response of most middle-income families would be to take the gain and plough it into homes for their children. In the current climate that would both send house prices spiralling higher and, even more than we see today, separate middle-income families from their counterparts on lower incomes and in rented accommodation."



To continue my question for right-leaning types in post 67:

What do you think about changing the taxation system so that personal taxation was reduced across the board, with the difference made up from taxing the estates of the dead to the point where very little of monetary value could be bequeathed or given to children once they ceased to be children. State education would be improved, so that although the children of the rich would benefit unfairly from having rich parents when young, they'll have to compete on a much more level playing field with everyone else if they want to maintain their lifestyle. Leave aside practical difficulties - what do you think in principle, if it could be made to work? And why?

Ah, it goes into the general pot which funds whatever the government want, including wars, politicians' salaries. Not just the services that we might like & certainly not much of it will end up directly benefitting the poor.


At what point do you consider someone is wealthy? Inheritance tax hits those who have quite modest assets, as the Guardian article says, probably much more significantly than the truly wealthy. They will already have paid PAYE and tax on the income from savings - why should they pay a third time? Probably the only way to claw back money from the very rich is through tax while they are alive.

< If you're dead, it's not yours, because you're dead.>
As has been said, unless you choose not to make a will, I still think you should be able to decide what happens to your assets. ( Would it be legal to ask to have your capital realised in cash & cremated with you?) Otherwise, people would perhaps be less inclined to save & would be taking steps to get rid of it well advance!


As I illustrated, mostly it does get divided & distributed. So it's not just a few people getting richer & richer.


Not sure that's so either. You've got to live somewhere. You only get the gain from downsizing or getting a loan with the property as security. If most of one's wealth is in ones' house, it may well need to be realised to provide income/care in old age. Again, it's middle-income people that lose out.

So more disposable income while alive, but none to pass on? You'd still have some people on good salaries with a more afluent lifestyle. Probably making sure they used it up so very little estate at the end. I don't think you'd ever get legislation passed that you can't give anything to children over 18.>


How do you deduce that?

< so that although the children of the rich would benefit unfairly from having rich parents when young, they'll have to compete on a much more level playing field with everyone else if they want to maintain their lifestyle. Leave aside practical difficulties - what do you think in principle, if it could be made to work? And why?>
Arguably that's available now, with student loans means tested. The least well off get the education without the debt at the end. These days it's perfectly possible for people to come from a modest background & make lots of money. I also know of affluent parents who give their children very little support, they have to learn to support themselves. I think you're looking at this too much in shades of black & white - people don't fall into such neat categories as you seem to imagine.

"Ah, it goes into the general pot which funds whatever the government want, including wars, politicians' salaries. Not just the services that we might like & certainly not much of it will end up directly benefitting the poor."

Then that's an argument for making sure that more of it does benefit the poor. Surely? But opponents of the inheritance tax would rather cut taxes for the wealthy than for the poor, for reasons that I just don't understand.

"At what point do you consider someone is wealthy? Inheritance tax hits those who have quite modest assets, as the Guardian article says, probably much more significantly than the truly wealthy."

Wealth is obviously relative. But in an estimate in the Guardian article, it says that only 15% will pay under current terms by 2010. I don't see how someone among the top 15% can claim not to be wealthy.

"They will already have paid PAYE and tax on the income from savings - why should they pay a third time? Probably the only way to claw back"

They won't pay, because they're dead. Someone else will pay. Someone who didn't earn that money. And according to the Guardian article, it's mostly a windfall tax - on unearned property increases.

"As I illustrated, mostly it does get divided & distributed. So it's not just a few people getting richer & richer."

Actually this is less true than it used to be now that the population isn't growing significantly. But even if money is being divided and distributed, that division isn't an equitable distribution. Strange as it might sound, lots of people getting unearned bonuses can actually be more damaging to the interests of those who aren't so lucky in their choice of parents than just a handful of super-rich, because of the nature of competition. If a lot of people have even an extra 20k advantage over others, that will push house prices up, and prices of other commodities.

"You've got to live somewhere. You only get the gain from downsizing or getting a loan with the property as security. If most of one's wealth is in ones' house, it may well need to be realised to provide income/care in old age. Again, it's middle-income people that lose out. "

I think that misses the point somewhat. The point is that the extra money will get passed to offspring who can buy houses, thus pushing prices up further, thus pricing out those without rich parents. So the property-owning classes perpetuate themselves, while it becomes tougher for anyone else to get onto the property ladder.

"So more disposable income while alive, but none to pass on? You'd still have some people on good salaries with a more afluent lifestyle. Probably making sure they used it up so very little estate at the end. I don't think you'd ever get legislation passed that you can't give anything to children over 18."

I did say leaving practical difficulties aside. It's important because it establishes what people's principles actually are.


"How do you deduce that?"

Sorry, perhaps that wasn't clear. It's not a deduction, it's a condition of the thought experiment. To see if right wingers are really interested in equal opportunities and competition, or just in perpetuating the status quo.

"Arguably that's available now, with student loans means tested. The least well off get the education without the debt at the end. These days it's perfectly possible for people to come from a modest background & make lots of money. I also know of affluent parents who give their children very little support, they have to learn to support themselves. I think you're looking at this too much in shades of black & white - people don't fall into such neat categories as you seem to imagine."

I don't imagine people fall into neat categories at all. But the fact that some people come from poor backgrounds and make a lot of money is not evidence of a fair society. The vast majority of the rich, and even of the moderately well off, are from rich or moderately well off backgrounds.

A fair society is one in which two people with the same abilities and the same drive to use them should have (all other things being equal) similar outcomes, whether their parents were princes or paupers.

Alas life is a lottery, with winners and losers.

I would be happy to see inheritence tax set at the cost of an average family home, plus £50K per child - on a single residence, no relief on a second home.

To follow some of the arguments above, fairness to all is the aim. So why not simply tax every dead person's estate at a flat amount? Fix a percentage ... Hence every one is treated fairly, be they one of 9 offspring of a factory-worker who scrimped for 50 years, or the single sprog of that factory's owner. Equality rather than someone's arbitrary measure as to what is 'equtiable'.

A lot of pretty idealism there Otto. The problem with idealism is we live in an imperfect world with imperfect people and we'll never achieve the ideal.

I don't think people generally begrudge others inheriting wealth. It's as much a trick of fate as being born in a Somalian hut or a private clinic in Kensington. What people do see is a disincentive to earn wealth in the shape of inheritance tax. Unfortunately there are far too many in our society who find it easier to point and whine about other's good fortune than to actually strive to better themselves. It's a curiously British thing to denigrate the achievements of others.

It's an insidious malaise that has affected British society that sees us with around 5 million economically inactive people sitting around whilst we import workers from abroad to fill vacant jobs. The feeling is, "Why should we work? The State will provide." And the State does. From cradle to grave.

You point the finger at people inheriting wealth that they haven't worked for. What about the wealth inherited via the State that those 5 million have? Is it fair that some people have to do two or even three jobs to feed a family and keep a roof over their heads whilst there are people who need do nothing and yet still see their families fed and their needs met?

15% get lucky and inherit from their parents.
8% get lucky and inherit from the state.
77% get no luck and have to work for every penny, knowing they are paying for the inheritance of the economically inactive. At least they're spared the burden of providing for the 15% who are wealthy.

It is my belief that people need to have something to aspire to. One of the most basic aspirations is to provide for your children, that they need not struggle as you had to. Why shouldn't people be rewarded for a lifetime of toil in the shape of being able to pass on the fruits of their labours to their children?

In a world of perfectly equal outcomes for all, there is no incentive to strive. To achieve this equality, you must lower the expectations of all because there will always be the lazy and the feckless.

If it is a more equal society you're after, considering those 5 million people cost us £160bn a year whereas losing inheritance tax would cost us £3.5bn, wouldn't it be a better idea to target those people who are costing the country more?

<> Otto, from post 72.

So, unless my reading ability has suddenly deserted me, Otto has proposed a kind of thought experiment because

<> Otto, post 67.

So yes, Struggling with Logic(), there is a lot 'pretty idealism' there. That's the point, to get at the underlying principles (or ideals if you like). None of the answers to Otto's posts have addressed this.

<> SWL

Interesting. To turn the last paragraph around a bit..
In a world of unequal outcomes, there is alwasy an incentive for the rich to strive to maintain that inequality. To maintain this inequality, you must raise the expectations of all, while concealing from the majority that there dreams are built on sand. Because, as John Stuart Mill said, 'Men desire not to be rich, but to be richer than other men.' Relative inequality is a fundamental part of our society. I think that most people want to become relatively richer than others, rather than to live well on some 'absolute' scale.